Incoming Apex Minerals boss Ed Eshuys says a new management team and mine plan should stem the losses from the company's Wiluna gold mine over coming months, although he admits he still faces a long road ahead to fix problems at the one-time market darling.
Apex shareholders approved the transition to a new management team at a thinly attended shareholder meeting yesterday, voting overwhelmingly in favour of an options package for Mr Eshuys, Drummond Gold and Azure Capital Investments, which is underwriting the $22.2 million recapitalisation of Apex.
Apex founder Mark Ashley, who resigned as managing director last month, skipped the meeting in favour of a family wedding in the US. Chairman Kim Robinson presided over the sombre affair, which wrapped up without dissent or even questions from the floor.
Mr Eshuys is expected to be installed as Apex's executive director after the settlement of its $22 million rights issue at the end of next week. The former boss of gold miner St Barbara has a difficult task ahead as he struggles to bring the cost of mining at Wiluna to profitable levels. Apex produced 9726 ounces in the December 2011 quarter, at an operating cost of $1696/oz - higher than the average price of $1667/oz it realised from sales.
Mr Eshuys told _WestBusiness _he expected figures to the end of March to be "similar to the last quarter", and a significant increase in the mining rate was needed to bring down average costs. He said a new Wiluna management team and mine plan had already been installed to bring Apex production to break-even levels over the next two quarters, with a 2013-14 production target of 100,000oz at an average cost of $1100/oz.
While profitable at current gold prices of more than $1600/oz, Mr Eshuys admitted even that target left Apex exposed to a long term downturn in the gold price. The goal, on which the issue of more than a third of his option package relied, was necessary to generate cash flow to continue regional exploration to help build Apex's long term future as a lower cost miner.
The Azure-backed 0.2¢ per share rights issue closed to shareholders yesterday and Mr Eshuys said the response from existing institutional investors was "encouraging".
The raising will help pay about $4.8 million in debts and allow Apex to spend $10 million on mine development and exploration needed to meet short term production goals.Apex exposed to long-term downturn in gold price. "Ed Eshuys